SEMA eNews Vol. 20, No. 36, September 7, 2017

Federal Court Strikes Down Overtime Pay Rule

A federal court overturned a 2016 rule issued by the U.S. Department of Labor (DOL), which greatly expanded the number of salaried employees who are required to be paid time-and-a-half for overtime work. The DOL rule raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemption to $47,476 per year. The rule was scheduled to take effect on December 1, 2016, but the same federal court placed it on hold last November pending review.

The old threshold remains in effect. Management, administrative and professional employees who earn a salary of more than $23,660 per year are exempt from receiving overtime pay when they work more than 40 hours per week. The rule impacts an estimated 4.2 million salaried workers. Some employers had already increased workers’ salaries or adjusted work schedules in anticipation that the 2016 rule would take effect.

The DOL intends to revisit the issue and has requested public feedback on issues addressed in the rule such as whether the current threshold should be updated for inflation and whether that threshold should consider other factors such as employer size, industry and regional cost of living.